Bitcoin Forum

well I do realize this is a noob question, but here it comes.
what is Escrow and how is it used?

Buyer sends money to escrow, you send item to buyer, escrow sends funds to you.

what is Escrow? lol is he a person? (noob q again)
I want full details
like how to use it and such things.

On here an escrow agent is usually a trusted user, but there are escrow companies. There's a list of forum escrowers here: https://bitcointalk.org/index.php?topic=133931.0

Escrow is when an uninterested third-party (the escrow agent) holds something important to at least one of the other parties. Escrow agents can be either one person or a group of people acting as some type of organization (web services are always still handled by human beings in case of dispute, though).

Usually on this forum, it's used where someone wants to sell something, but the buyer doesn't want to pay upfront because he doesn't fully trust the seller. Instead, the seller finds a reputable escrow agent who will hold his money which the buyer must also agree to use. Then, the escrow agent is basically just a contract enforcer. He ensures the contract (this could be as simple as the seller saying "I'll sell you two working 1H-IEN4-KL LCD monitors for 1BTC") is fully enforced. When the escrow agent is satisfied that the contract has run successfully to its end (or when the buyer tells the escrow agent escrow can be released to the seller), the escrow agent will send the coins or whatever to the seller.


Escrow can't protect you from everything and is constrained by the contract. They often act as arbitrators in case of dispute, where they'll settle on who breached contract and what the outcome of that should be, which may or may not be in your favor. A weak purchase agreement like the simple example I gave is an example of abusing escrow due to how much is left up in the air (Who pays shipping on returns? What happens if there's a dead pixel? etc). Oftentimes, purchase agreements are really vague, so you're relying on the escrow agent just "doing what's right," which is obviously very subjective.

There are a bunch of other uses for escrow, though. If a lender wants collateral from a lendee, the lendee would want that collateral held by an escrow agent so they know the lender won't just run off when given the collateral. If someone has a giveaway where they offer to give .05BTC to charity each time someone posts an original photograph of a llama spitting, they might want to pre-pay donations into escrow so the people taking pictures of llamas know their efforts won't be wasted.

so it's more like a middle man.
that's cool.
can any1 be an Escrow? (I dont want to be/) just asking how hard it is to be 1?

Anyone can offer to be one but it's pointless using them unless they've built up some rep and trust, otherwise you might as well not even bother using one.

Anyone can hold collateral. It doesn't require any special equipment. It's ridiculously good pay for the time, usually, but in cases where there's a dispute and a weak contract, it can easily take up waaaay more time than it's worth, especially when there's a language barrier.

Actually - I forgot to mention something pretty important - multi-sig escrow, where you don't even have to worry about the escrow agent running off with the money (unless either the buyer or seller are colluding with the escrow agent to scam one of the other guys). Forbes has an article on multi-sig and some of the implications here: http://www.forbes.com/sites/johnvillasenor/2014/03/28/could-multisig-help-bring-consumer-protection-to-bitcoin-transactions/

In effect, yes - it's simply a person agreed upon to hold something of value to ensure that the trade goes through as agreed and possibly provide arbitration in the case that the trade falls through.

Technically, yes as long as both parties agree - however generally the escrow's who actually get customers are those who have a long time reputation on this forum and have handled reasonably large sums (at any given point in time).

If you want to do escrow without reputation, you can always make a deposit with a trustworthy escrow, this way people will trust you up to the amount you deposited. Slowly, people might start trusting you even without the deposit.

The best person I can suggest you for an escrow is "escrow.ms" , search him out, he'll do any escrow job for you

There are a few members who seem to specialize in escrow.  Make sure to look into past deals, don't just allow anyone to escrow.  But is a very good idea if seller has low reputation.

Escrow is a way to say a middleman - You can use it as an intermediate to ensure both parties stand to their part of the bargain. Both buyer and seller deliver to escrow and Escrow release to each or Buyer send BC to escrow. Seller send item to buyer, Escrow send BTC to seller.

In other words, an escrow is an intermediary or middle man that makes sense now.Thanks.

But then why would people use your new escrow service instead of that experienced trustworthy escrow?

Yeah, there is always a risk when you use a escrow that hasn't been timetested by a lot of people, but with this paranoid mentality there would be no new successful business ever, everyone has to start from scratch once (unless you are born rich  ::))

Without escrows this forum will be full of scammers, it's a really useful service for all the bitcoin users.

There is still so many scammer around, noobs forget to use escrow or don't want to waste time on escrow
and at the end they got scammed.

If the new escrow member starts with no fees, there will be a reason for them to try his service.

A real escrow agent is licensed and insured because they are holding your funds.  Some people on here claiming to escrow lend out your funds while they are holding them so be careful with unlicensed escrow services.  people also buy and sell forum accounts so you can't always depend on the rating system.

Also note that dispute resolution is NOT part of escrow, it is a separate thing.  It is a conflict of interest for an escrow agent to also resolve a dispute but many of the unlicensed escrow services on here do both.  A licensed escrow service such as escrow.com has a third party resolve any disputes that arise.  In some cases these unlicensed escrow agents have simply closed up shop and took all the funds.  Also, if something is supposed to be mailed to you the escrow agent has no idea what is in the box unless it goes to them first.

The multi-sig thing is also not technically escrow, it is a mediated transaction.  This is because the mediator never has access to the funds.  I think this will be the way of the future because you don't have to turn over the funds to a third party like escrow.

Apparently, escrow fraud is widespread these days.
The Internet Crimes Complaint Center has a section for this.

http://www.ic3.gov/crimeschemes.aspx#item-8

Escrow Services Fraud

In an effort to persuade a wary Internet auction participant, the perpetrator will propose the use of a third-party escrow service to facilitate the exchange of money and merchandise. The victim is unaware the perpetrator has actually compromised a true escrow site and, in actuality, created one that closely resembles a legitimate escrow service. The victim sends payment to the phony escrow and receives nothing in return. Or, the victim sends merchandise to the subject and waits for his/her payment through the escrow site which is never received because it is not a legitimate service.

If you believe you may have fallen victim to this type of scam and wish to report it, please file a complaint with us.

One of the things an escrow agent should be aware of if they're newish is the surprisingly high number of instances where sellers try to provide fake escrow addresses. -So they'll actually set up an escrow contract through someone legit, have the agreement made up, and then the seller sends the buyer a PM fake-quoting the escrow agent providing a phony escrow address. Sellers should never trust an escrow address not sent directly by the escrow agent, even n-of-m parts.

Escrow sites may see cases as described by ic3, though I've never heard of one (yet).

Total noob here to this forum but not bitcoin, thinking of selling some gift cards for btc over in the currency exchange section. It seems tomatocage is the go to escrow guy in general. If I wanted to use escrow by him, would I just pm him once I've come to an agreement with a buyer? Also, how much do they usually charge for escrow?

Again, sorry for such noobish questions.

Thanks in advance.

If Tomatocage is unavailable, there is a list of other trusted forum escrow providers here:
https://bitcointalk.org/index.php?topic=276897.0


Yes.  Once an agreement is worked out on the terms of the transaction, you can send a PM to the escrow provider that you both agree to use.  Include all relevant details.  Then the escrow provider should confirm their understanding of the transaction with both parties and provide a bitcoin address where they will hold the bitcoins until authorized to release the bitcoins to you.

Some common details you may want to consider to reduce the risk of disagreement if everything doesn't go perfectly are:

• How many bit coins will be provided to escrow?
• How many bit coins will be released to the bitcoin receiver?
• What product is being supplied to the bitcoin provider?
• What exchange rate will be used to compute the payment?
• Who is paying the costs (shipping fees, customs fees, escrow fees, shipping fees for return, etc)?
• When is the bitcoin payment expected to be sent?
• When is the gift card expected to be provided?
• Is the gift card seller expected to compensate the buyer for late delivery?
• Is the gift card seller expected to compensate the buyer if he becomes unable to deliver?
• Is the gift card buyer expected to compensate the seller if he backs out of the transaction?
• How much time does each party have to fulfill their obligations before the escrow is automatically released to the other party?

As an example...

If the buyer funds escrow, and then you provide the gift card to the buyer, what happens if the buyer then disappears without ever confirming to the escrow provider that he received the gift card?  How long should the escrow provider wait before releasing the funds to you?  If he releases as soon as you request it, then there is a risk to the buyer that you could fail to send the gift card and could request release of escrow while he is offline.  On the other hand, if there is no deadline set ahead of time, then you could be stuck waiting for a few days (or even weeks) before the escrow provider is comfortable releasing escrow to you.

I just wanted to thank you for taking the time to respond to my question in such a detailed and helpful way. This is exactly what I needed to know and it is extremely appreciated. I see you are on the list of escrow providers and don't mean to jerk you off but I will definitely try using you first for escrow when I get around to making an actual transaction.

Thanks again

A friendly reminder: You need to be very careful with the PM from the escrow provider.
I have heard more than one case that someone received a fake PM from an imposer and they carelessly sent the their bitcoin to the imposer's address.